Class Action Lawsuit Alleges Capital One Failed to Properly Investigate Accountholder’s Fraud Claim

New to ClassAction.org? Read our Newswire Disclaimer

A new class action lawsuit accuses Capital One of breaching its accountholder contract by both failing to properly investigate financial fraud claims and wrongfully denying victims reimbursement.

Want to stay in the loop on class actions that matter to you? Sign up for ClassAction.org’s free weekly newsletter here.

The 25-page proposed class action lawsuit was filed by a California resident who claims her bona fide fraud claim was rejected without a reasonable investigation or explanation after the bank “didn’t find an error” in connection with fraudulent transactions on her account.

The suit alleges that Capital One, by denying the woman’s fraud claim without conducting a sufficient investigation and providing a written explanation or supporting documentation, has run afoul of the federal Electronic Funds Transfer Act (EFTA), which places the burden of proving that fraud did not occur firmly on the bank’s shoulders.

“This requirement is more than a formality: financial institutions must explain their findings and provide the requested documentation so that consumers like [the plaintiff] can refute the financial institution’s conclusions,” the case explains. “Without such information, consumers … are hamstrung by Capital One’s black-box decision-making.”

After the plaintiff’s debit card was stolen out of her car in March 2023, the woman submitted a fraud claim with the bank identifying nearly $1,500 in unauthorized charges, the complaint relays. Despite the detailed proof the plaintiff provided of the fraudulent transactions and a corroborating police report, Capital One informed the woman by email that it had rejected her claim on the grounds that the bank had found no “error,” the filing contends. Shortly after, Capital One closed her checking account, the lawsuit says.

The suit charges that the bank, in spite of its obligations under the EFTA, denied the plaintiff’s fraud claim without performing a sufficient investigation and providing any substantive explanation or justification of its reasoning.

“It was Capital One’s burden to prove that these disputed transactions were authorized—not [the plaintiff’s]—and its failure to do so is unlawful and unfair to [the plaintiff] and thousands of other consumers who have to bear the consequences of stolen funds in unlimited sums,” the case argues.

The bank’s alleged EFTA violations create a “[b]ank versus the consumer system in which the bank always wins,” the complaint asserts, adding that “[t]his is precisely the type of system federal law was designed to prevent.”

The lawsuit looks to represent any Capital One checking accountholders who, within the applicable statute of limitations period, timely notified the bank that one or more charges on their accounts were unauthorized and were denied reimbursement by the defendant.

Are you owed unclaimed settlement money? Check out our class action rebates page full of open class action settlements.